As shore properties are sold after Sandy, beach towns change

Bob Zirkel bought a Sandy-damaged house and is making it into a home for his family.

Superstorm Sandy sent 18 inches of water rushing in to Bob Zirkel’s Ortley Beach home, causing thousands of dollars in damage.

But bad as the storm was for Ortley Beach — one of the hardest-hit areas on the Shore — it also opened up an opportunity for Zirkel, a construction superintendent who lives in Rockaway. Just seven months after the storm, he spent $250,000 to trade up, buying a badly damaged house near the ocean. Now he’s building his family’s new beach getaway on the site, on the border of Ortley Beach and Lavallette.

Some homes remain badly damaged, and some have been torn down, leaving empty lots.

"I got an incredible bargain," Zirkel, 53, said of the property, which was assessed at more than $600,000 as recently as 2011.

Almost two years after Sandy devastated parts of the Shore, damaged properties are changing hands, as some owners decide they can’t afford to rebuild, and buyers look for a place to create their own summer memories. Many badly damaged properties have been torn down, leaving empty lots — which had been a rare commodity at the beach.

"There’s a lot going on. The market is really rebounding," said Eric Birchler of Birchler Real Estate, which has offices in Ortley Beach and other towns on the narrow barrier island that stretches from Point Pleasant Beach to Island Beach State Park. "They’re buying the dirt and they’re knocking the house down, and they’re building their beach house."

Although many Shore towns sustained little storm damage and have almost fully recovered, some areas have a way to go. Standing on the Ortley Beach boardwalk, with the roar of the ocean at your back, you can look over a several-block landscape that is a patchwork of empty lots, new construction and homes being repaired. One home stands open to the elements, its front wall blasted off by the waves. Most observers say it will be several years before the Shore is back to normal.

In Ortley Beach, prices have moved up from the bargain-basement levels seen in the year after the October 2012 storm. But they’re still down significantly — depending on whom you ask, by 20 percent or so.

Many of the sellers were families who had owned their homes for decades, even generations.

"You didn’t have to be really wealthy to live here in Ortley Beach," said Tim O’Shea, a real estate agent with Birchler, who has an Ortley Beach house that was badly damaged and is still being repaired. "A lot of homes passed down through the generations. If you scraped together $3,500 to $4,000 in taxes, you could come down on Memorial Day and stay till Labor Day."

But many of these homeowners didn’t have flood insurance, and once the storm hit, they were faced with enormous costs to repair and, in many cases, elevate the homes. Elevating a home costs from $80,000 to $100,000, once all the expenses are factored in, said Lee Childers of Childers Sotheby’s International Realty, which has six offices in Ocean County, most on the barrier island. The federal flood insurance program reimburses a maximum of $30,000 for elevating a home.

And there’s no government disaster aid for owners of second homes.

As a result, for many owners, "there was really no way out but to sell, probably at a price below what they’d get if they’d been able to hold on," said Peter Reinhart of the Kislak Institute for Real Estate at Monmouth University.

"A number of people have decided to put their vacant land or gutted home on the market," O’Shea said. "It’s been a really long time since we’ve had vacant land. We do have quite a bit of interest."

To the surprise of real estate brokers, most of that interest has not been from builders or investors; it’s been from people who want to build a home for their own use.

Builders have shied away, O’Shea said, because they’re not sure they can make a profit. They ask O’Shea how much a house might sell for.

"I tell them I have no idea," he said. There haven’t been enough post-Sandy sales to get a sense of where home values will settle, he said.

Speculative investing risky

Childers said that property values haven’t dropped far enough, post-Sandy, to make a speculative investment worth the risk. In fact, he has built spec homes himself in the past, but he’s not tempted now.

"I would be doing it if there was money to be made," he said.

Reinhart said the challenges affecting the housing market everywhere — including tight lending standards — are holding back potential real estate investment at the Shore.

One buyer who thinks he got a good deal after Sandy is Gary LaNeve, a retired Paterson police officer whose family has vacationed in Ortley Beach since 1951 — the year his grandfather, a barber, bought a bungalow four houses from the ocean. That house was destroyed by the storm, and members of LaNeve’s extended family are rebuilding, kicking in their own money because insurance won’t cover the entire cost.